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Policy

Supreme Decisions

by A. Maureen Rouhi
June 24, 2013 | A version of this story appeared in Volume 91, Issue 25

To celebrate C&EN’s 90th anniversary, one Editor’s Page each month will examine materials from C&EN Archives. Featured articles are freely downloadable for one month.

The Supreme Court has decided two cases with great implications for C&EN readers. On June 13, it ruled unanimously that naturally occurring human genes are not patentable (C&EN, June 17, page 7). And on June 17, it ruled by a 5-3 vote that pay-for-delay deals by drug companies can be illegal (see page 6).

Whether human genes are patentable is a controversial question that goes back to the early days of the sequencing of the human genome. In 1991, the National Institutes of Health began filing patent applications for human gene sequences identified by human genome sequencing pioneer J. Craig Venter, then at the National Institute of Neurological Disorders & Stroke. “Critics of the patenting policy fear it will choke commercial development of the new knowledge, and inhibit free flow of information among scientists,” C&EN reported on Feb. 17, 1992.

“NIH’s first application … immediately drew negative reactions from scientists and research administrators involved in the human genome project,” C&EN reported on June 8, 1992. “Nobel Laureate James D. Watson, whose recent resignation from the directorship of NIH’s Center for Human Genome Research was triggered in part by his disagreement with [NIH] on this issue, is strongly opposed to patenting” of genes.

Eventually the U.S. Patent & Trademark Office rejected NIH’s patent claims as “vague, indefinite, misdescriptive, inaccurate, and incomprehensible.” Importantly, the functions of the genes for which patents were being claimed were unknown (C&EN, Oct. 26, 1992, page 17). NIH did not appeal, deciding “it is not in the best interest of either science or the public to seek patents on gene sequences whose functions are unknown” (C&EN, Feb. 21, 1994, page 5).

Those early skirmishes, however, did not result in a ban on the patenting of human genes. The Supreme Court ruling on June 13 eliminates all ambiguity, striking down the patents held by biotech firm Myriad Genetics on two genes correlated with high risk of breast and ovarian cancers. The genes, BRCA1 and BRCA2, now become available to others for research and development of any number of applications, benefiting patients, doctors, and researchers.

The June 17 ruling, meanwhile, establishes that drug companies entering into agreements that purposely delay the entry of generic drugs into the market could run afoul of antitrust laws.

Pay-for-delay deals are an unintended consequence of the Drug Price Competition & Patent Term Restoration Act. Better known as the Hatch-Waxman Act, the law created the Abbreviated New Drug Application, or ANDA, to spur the development of generic drugs, I wrote in a Sept. 23, 2002, story. ANDA, I explained, “allowed development of generic versions even when the reference product is still protected by patents. In all other industries, this activity constitutes patent infringement.”

Using what is called Paragraph IV certification, a generic drug company can launch a generic product while the reference drug is still patent protected if it establishes either that the existing patents are invalid or that its generic product does not infringe the existing patents.

A windfall awaits firms that launch a generic drug this way because Hatch-Waxman gives them market exclusivity for 180 days. “During this time,” I wrote, “a generic drug can be sold at good margins, at a price only slightly lower than that of the brand-name product. Huge profits can be made.”

Paragraph IV certifications are costly and risky, however, because of the ensuing litigation. As soon as an application is made, the innovator company almost always sues the generic drug applicant for patent infringement. Sometimes, to settle the lawsuit, innovator and generic drug companies strike pay-for-delay deals: In exchange for not launching a generic drug and reaping the profits of the 180-day exclusivity, generics companies are compensated by the innovator company.

The Federal Trade Commission has long held that some of these agreements violate antitrust laws. Now the agency has the Supreme Court’s nod, opening pay-for-delay deals to closer scrutiny than ever before.

Views expressed on this page are those of the author and not necessarily those of ACS.

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